What is Intraday Trading?

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  • 10 Jan 2023

Intraday trading, also known as day trading, is a popular trading strategy adopted by several investors. This article provides a comprehensive guide to intraday trading, providing valuable insights into its strategies, risks, and key considerations for aspiring day traders.

Intraday trading, often referred to as day trading, involves buying and selling stocks within the same trading day. With share prices constantly fluctuating throughout the day, intraday traders actively seek to capitalize on these price movements by executing trades within the confines of a single trading session. By swiftly buying and selling shares, day traders aim to secure profits from these short-term market fluctuations.

Watch and Learn
Intraday Trading Guide
Tune in to this video where Indu Choudhary will explain what intraday trading is in simple language along with examples. We will also take you though five key important rules you must keep in mind as an intraday trader.

Now that you know the intraday trading meaning, let’s see how to do this trading. Note that this trading style requires a disciplined approach, sound strategies, and a deep understanding of market dynamics.

  • Educate Yourself: Begin your intraday trading journey by investing in your knowledge. Familiarize yourself with the fundamentals of the financial markets, including stocks, commodities, forex, or derivatives, depending on your preferred market. Learn about technical analysis tools, chart patterns, indicators, and other relevant concepts that will assist you in identifying trading opportunities and making informed decisions.

  • Develop a Trading Plan: Crafting a well-defined intraday trading plan is vital for intraday trading success. Determine your trading goals, risk tolerance, and preferred trading style. Set realistic profit targets and establish strict risk management strategies, including stop-loss orders to limit potential losses. Stick to your plan, as emotional decision-making can lead to impulsive and detrimental trading actions.

  • Choose the Right Trading Platform: Selecting a reliable and user-friendly trading platform is crucial for executing intraday trading efficiently. Ensure the platform offers real-time data, advanced charting tools, order execution capabilities, and dedicated customer support. Test different platforms to find the one that suits your requirements and provides a seamless trading experience.

  • Technical Analysis: Mastering technical analysis is key to identifying potential trade setups. To analyze price patterns, trends, and market momentum, utilize various technical indicators, such as moving averages, relative strength index (RSI), and stochastic oscillators. Combine multiple indicators to confirm trade signals and improve accuracy. Regularly analyze charts at different time frames to identify entry and exit points.

  • Practice Discipline and Emotional Control: Intraday trading can be emotionally demanding, as decisions need to be made quickly under volatile market conditions. Maintain discipline by adhering to your trading plan and avoiding impulsive actions based on emotions or external influences. Learn from both successful and unsuccessful trades, constantly improving your skills and strategies.

  • Risk Management: Effective risk management is paramount in intraday trading. Analyze the maximum amount you are willing to risk on each trade and put stop-loss orders accordingly. Don't risk more than you can lose. Additionally, diversify your trades across different stocks or assets to reduce the impact of individual trade outcomes on your overall portfolio.

With intraday meaning and the way to do it becoming apparent, let's see the benefits of intraday trading.

  • Potential for Quick Profits: Intraday trading provides the opportunity to generate profits within a single trading day. You can benefit from short-term price movements and capitalize on small price fluctuations. By effectively identifying entry and exit points, you can accumulate profits rapidly.

  • Leveraging Market Volatility: Volatility is a day trader's friend. Intraday traders thrive on price volatility as it presents numerous trading opportunities. Stocks, commodities, and currencies often experience significant price movements during trading, providing scope for profit potential through well-timed trades.

  • Lower Overnight Risks: Unlike swing or positional trading, where positions are held overnight, intraday trading eliminates exposure to overnight market risks. Overnight events such as economic reports, geopolitical developments, or company announcements can cause significant price gaps, potentially leading to substantial losses. Intraday trading allows traders to close their positions before such risks materialize.

  • Improved Liquidity: Intraday traders primarily focus on highly liquid markets and instruments, ensuring that there is sufficient trading volume to enter and exit positions quickly. High liquidity reduces the risk of slippage, where the executed price differs from the expected price due to limited market depth.

  • Flexibility and Quick Decision-Making: Intraday trading demands rapid decision-making skills and the ability to adapt swiftly to changing market conditions. Traders can react promptly to news, market trends, or technical signals, adjusting their strategies accordingly. This flexibility enables them to seize potential profit opportunities as they arise.

Intraday trading offers exciting profit opportunities but also comes with inherent risks. With proper education, a robust trading plan, technical analysis skills, and disciplined execution, you can successfully navigate intraday trading. Consistency and continuous learning are key to honing your skills and achieving long-term profitability. Embrace the challenges, stay resilient, and enjoy the journey towards becoming a skilled intraday trader.

Now that you understand intraday trading, we will see its working mechanism along with the taxation of its gains in the upcoming articles. Also, we will dig into the concept of pivot point strategy to make gains from this form of trading. Do watch out for this space to learn more about intraday trading.


In intraday trading, stocks are bought and sold within the same day. In other words, all positions are squared off when the market closes.

While having a Demat and trading account are prerequisites, you need to understand the basic concepts and learn risk management. You also need a solid a trading plan and monitor markets closely.

Intraday trading relies on price movements within a single trading day, and volatile markets can lead to unpredictable price swings. Sudden market fluctuations can result in unexpected losses or missed profit opportunities. Also, the fast-paced nature of intraday trading can induce emotional decision-making. Fear, greed, and impulsiveness can lead to hasty or irrational trading choices, resulting in poor outcomes

It can vary depending upon the market and the specific financial instrument you are trading. Stocks, futures, or forex, may have specific trading hours and unique patterns. Additionally, major economic announcements, company earnings releases, and geopolitical events can significantly impact market volatility and create trading opportunities.

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